[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6142 Introduced in House (IH)]


109th CONGRESS
  2d Session
                                H. R. 6142

      To amend the African Growth and Opportunity Act relating to 
    preferential treatment to apparel articles of lesser developed 
                   countries, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 21, 2006

  Mr. Thomas introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
      To amend the African Growth and Opportunity Act relating to 
    preferential treatment to apparel articles of lesser developed 
                   countries, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. TABLE OF CONTENTS.

    The table of contents of this Act is as follows:

Sec. 1. Table of contents.
              TITLE I--AFRICAN GROWTH AND OPPORTUNITY ACT

Sec. 101. Short title.
Sec. 102. Preferential treatment of apparel products of lesser 
                            developed countries.
Sec. 103. Technical corrections.
Sec. 104. Sub-Saharan Africa economic activity credit.
       TITLE II--GENERALIZED SYSTEM OF PREFERENCES (GSP) PROGRAM

Sec. 201. Limitations on waivers of competitive need limitation.
Sec. 202. Extension of GSP program.
                            TITLE III--HAITI

Sec. 301. Short title.
Sec. 302. Trade benefits for Haiti.
Sec. 303. ITC study.
Sec. 304. Sense of Congress on interpretation of textile and apparel 
                            provisions for Haiti.
Sec. 305. Technical amendments.
Sec. 306. Effective date.

              TITLE I--AFRICAN GROWTH AND OPPORTUNITY ACT

SEC. 101. SHORT TITLE.

    This title may be referred to as the ``Africa Investment Incentive 
Act of 2006''.

SEC. 102. PREFERENTIAL TREATMENT OF APPAREL PRODUCTS OF LESSER 
              DEVELOPED COUNTRIES.

    (a) In General.--Section 112 of the African Growth and Opportunity 
Act (19 U.S.C. 3721) is amended--
            (1) by redesignating subsections (c) through (e) as 
        subsections (d) through (f);
            (2) in subsection (b)--
                    (A) in the matter preceding paragraph (1), by 
                striking ``The'' and inserting ``Subject to subsection 
                (c), the'' ; and
                    (B) by striking subparagraph (B) and redesignating 
                subparagraph (C) as subparagraph (B); and
            (3) by inserting after subsection (b) the following new 
        subsection:
    ``(c) Lesser Developed Countries.--
            ``(1) Preferential treatment of products through september 
        30, 2008.--
                    ``(A) Products covered.--In addition to the 
                products described in subsection (b), and subject to 
                paragraph (4), the preferential treatment described in 
                subsection (a) shall apply through September 30, 2008, 
                to apparel articles wholly assembled, or knit-to-shape 
                and wholly assembled, or both, in one or more lesser 
                developed beneficiary sub-Saharan African countries, 
                regardless of the country of origin of the fabric or 
                the yarn used to make such articles, in an amount not 
                to exceed the applicable percentage of the aggregate 
                square meter equivalents of all apparel articles 
                imported into the United States in the preceding 12-
                month period for which data are available.
                    ``(B) Applicable percentage.--For purposes of 
                subparagraph (A), the term `applicable percentage' 
                means--
                            ``(i) 2.9285 percent for the 1-year period 
                        beginning October 1, 2005;
                            ``(ii) 3.5 percent for the 1-year period 
                        beginning October 1, 2006; and
                            ``(iii) 3.5 percent for the 1-year period 
                        beginning October 1, 2007.
            ``(2) Preferential treatment of products beginning october 
        1, 2008.--
                    ``(A) In general.--In addition to the products 
                described in subsection (b), the preferential treatment 
                described in subsection (a) shall apply to apparel 
                articles described in subparagraph (B) of a producer or 
                entity controlling production that are imported 
                directly from a lesser developed beneficiary sub-
                Saharan African country during an applicable 1-year 
                period, subject to the limitations set forth in this 
                subsection.
                    ``(B) Articles described.--The apparel articles 
                referred to in subparagraph (A) are apparel articles 
                that are wholly assembled, or are knit-to-shape, in a 
                lesser developed beneficiary sub-Saharan African 
                country from any combination of fabrics, fabric 
                components, components knit-to-shape, and yarns.
                    ``(C) Restrictions in second through seventh 
                applicable 1-year periods.--The preferential treatment 
                under subparagraph (A) applies to apparel articles 
                described in subparagraph (B) in each of the second 
                through seventh applicable 1-year periods only if, for 
                each entry in the preceding applicable 1-year period, 
                the sum of--
                            ``(i) the cost or value of the materials 
                        produced in one or more beneficiary sub-Saharan 
                        African countries or one or more countries 
                        described in subparagraph (E), or any 
                        combination thereof, plus
                            ``(ii) the direct costs of processing 
                        operations (as defined in section 213(a)(3)) of 
                        the Caribbean Basin Economic Recovery Act 
                        performed in one or more beneficiary developed 
                        beneficiary sub-Saharan African countries or 
                        one or more countries described in subparagraph 
                        (E), or any combination thereof,
                is not less than the applicable percentage (as defined 
                in subparagraph (I)) of the declared customs value of 
                such apparel articles.
                    ``(D) Deductions.--In calculating cost or value 
                under subparagraph (C)(i), there shall be deducted the 
                cost or value of--
                            ``(i) any foreign materials that are used 
                        in the production of the apparel articles in a 
                        lesser developed beneficiary sub-Saharan 
                        African country; and
                            ``(ii) any foreign materials that are used 
                        in the production of the materials described in 
                        subparagraph (C)(i).
                    ``(E) Countries described.--The countries referred 
                to in subparagraph (C) are the following:
                            ``(i) The United States.
                            ``(ii) Any country that is a party to a 
                        free trade agreement with the United States 
                        that is in effect on the date of the enactment 
                        of the Africa Investment Incentive Act of 2006, 
                        or that enters into force under the Bipartisan 
                        Trade Promotion Authority Act of 2002 (19 
                        U.S.C. 3801 et seq.).
                            ``(iii) Any country designated as a 
                        beneficiary country under section 213(b)(5)(B) 
                        of the Caribbean Basin Economic Recovery Act.
                            ``(iv) Any country designated as a 
                        beneficiary country under section 204(b)(6)(B) 
                        of the Andean Trade Preference Act (19 U.S.C. 
                        3203(b)(6)(B)).
                    ``(F) Annual aggregation.--The requirements under 
                subparagraph (C) relating to applicable percentage may 
                also be met for articles of a producer or an entity 
                controlling production that enter during an applicable 
                1-year period by aggregating--
                            ``(i) the cost or value of materials under 
                        subparagraph (C)(i), and
                            ``(ii) the direct costs of processing 
                        operations under subparagraph (C)(ii),
                of all apparel articles of that producer or entity 
                controlling production that are wholly assembled, or 
                are knit-to-shape, in a lesser developed beneficiary 
                sub-Saharan African country and are entered during that 
                applicable 1-year period.
                    ``(G) Deductions.--In calculating the cost or value 
                under subparagraph (F)(i), there shall be deducted the 
                cost or value of--
                            ``(i) any foreign materials that are used 
                        in the production of the articles in a lesser 
                        developed beneficiary sub-Saharan African 
                        country; and
                            ``(ii) any foreign materials that are used 
                        in the production of the materials described in 
                        subparagraph (F)(i).
                    ``(H) Quantitative limitations.--The preferential 
                treatment described in this paragraph shall be 
                extended, during each applicable 1-year period, to not 
                more than 3.5 percent of the aggregate square meter 
                equivalents of all apparel articles imported into the 
                United States in the most recent 12-month period for 
                which data are available. No preferential treatment 
                shall be provided under this paragraph after the last 
                day of the seventh applicable 1-year period.
                    ``(I) Definitions.--In this paragraph:
                            ``(i) Applicable 1-year period.--
                                    ``(I) In general.--The term 
                                `applicable 1-year period' means each 
                                of the 1-year periods described in 
                                subclauses (I) through (VIII).
                                    ``(II) Initial 1-year period.--The 
                                term `initial 1-year period' means the 
                                1-year period beginning October 1, 
                                2008.
                                    ``(III) Second applicable 1-year 
                                period.--The term `second applicable 1-
                                year period' means the 1-year period 
                                beginning October 1, 2009.
                                    ``(IV) Third applicable 1-year 
                                period.--The term `third applicable 1-
                                year period' means the 1-year period 
                                beginning October 1, 2010.
                                    ``(V) Fourth applicable 1-year 
                                period.--The term `fourth applicable 1-
                                year period' means the 1-year period 
                                beginning October 1, 2011.
                                    ``(VI) Fifth applicable 1-year 
                                period.--The term `fifth applicable 1-
                                year period' means the 1-year period 
                                beginning October 1, 2012.
                                    ``(VII) Sixth applicable 1-year 
                                period.--The term `sixth applicable 1-
                                year period' means the 1-year period 
                                beginning October 1, 2013.
                                    ``(VIII) Seventh applicable 1-year 
                                period.--the term `seventh applicable 
                                1-year period' means the 1-year period 
                                beginning October 1, 2014.
                            ``(ii) Applicable percentage.--The term 
                        `applicable percentage' means--
                                    ``(I) 50 percent or more during the 
                                initial applicable 1-year period, the 
                                second applicable 1-year period, and 
                                the third applicable 1-year period;
                                    ``(II) 55 percent or more during 
                                the fourth applicable 1-year period; 
                                and
                                    ``(III) 60 percent or more during 
                                the fifth, sixth, and seventh 
                                applicable 1-year periods.
            ``(3) Development of procedure to ensure compliance.--
                    ``(A) In general.--The Bureau of Customs and Border 
                Protection of the Department of Homeland Security 
                shall, not later than 1 year after the date of 
                enactment of the Africa Investment Incentive Act of 
                2006, develop and implement methods and procedures to 
                ensure ongoing compliance with the requirements set 
                forth in paragraph (2).
                    ``(B) Noncompliance.--If the Bureau of Customs and 
                Border Protection finds that a producer or an entity 
                controlling production has not satisfied the 
                requirements of paragraph (2) in any applicable 1-year 
                period, then apparel articles described in paragraph 
                (2)(B) of that producer or entity shall be ineligible 
                for preferential treatment under paragraph (2) during 
                any succeeding applicable 1-year period until--
                            ``(i) the cost or value of materials under 
                        paragraph (2)(C)(i), plus
                            ``(ii) the direct costs of processing 
                        operations under paragraph (2)(C)(ii),
                of that producer or entity controlling production, is 
                not less than the applicable percentage that would 
                otherwise apply under paragraph (2)(C), plus 10 
                percent, of the aggregate declared customs value of all 
                apparel articles of that producer or entity controlling 
                production that are wholly assembled, or are knit-to-
                shape, in a sub-Saharan African country and are entered 
                during the preceding applicable 1-year period.
                    ``(C) Retroactive application of duty-free 
                treatment.--
                            ``(i) In general.--If--
                                    ``(I) a producer or an entity 
                                controlling production is ineligible 
                                for preferential treatment under 
                                paragraph (2) in an applicable 1-year 
                                period because that producer or entity 
                                controlling production did not satisfy 
                                the requirements of paragraph (2)(C) or 
                                (2)(F), and
                                    ``(II) that producer or entity 
                                controlling production satisfies the 
                                requirements of subparagraph (B) of 
                                this paragraph in that applicable 1-
                                year period,
                        then, notwithstanding section 514 of the Tariff 
                        Act of 1930 (19 U.S.C. 1514) or any other 
                        provision on law, upon proper request filed 
                        with the Bureau of Customs and Border 
                        Protection before the 90th day after the Bureau 
                        of Customs and Border Protection determines 
                        that subclause (II) applies, any entry 
                        described in clause (ii) shall be liquidated or 
                        reliquidated as though such preferential 
                        treatment applied to such entry.
                            ``(ii) Entries.--An entry is described in 
                        this clause if it is an entry of any articles--
                                    ``(I) that was made during the 
                                applicable 1-year period referred to in 
                                clause (i)(I); and
                                    ``(II) with respect to which there 
                                would have been preferential treatment 
                                under paragraph (2) if the producer or 
                                entity controlling production had 
                                satisfied the requirements of paragraph 
                                (2)(C) or (2)(F) (as the case may be).
                    ``(D) Fabrics not available in commercial 
                quantities.--For purposes of determining the applicable 
                percentage under paragraph (2)(C) or (2)(F), there may 
                be included in that percentage--
                            ``(i) the cost of fabrics or yarns to the 
                        extent that apparel articles of such fabrics or 
                        yarns would be eligible for preferential 
                        treatment, without regard to the source of the 
                        fabrics or yarns, under Annex 401 of the NAFTA; 
                        and
                            ``(ii) the cost of fabrics or yarns that 
                        are designated as not being available in 
                        commercial quantities for purposes of--
                                    ``(I) section 213(b)(2)(A)(v) of 
                                the Caribbean Basin Economic Recovery 
                                Act,
                                    ``(II) paragraph (5) of this 
                                subsection,
                                    ``(III) section 
                                204(b)(3)(B)(i)(III) or (ii) of the 
                                Andean Trade Preference Act, or
                                    ``(IV) any other provision, 
                                relating to determining whether a 
                                textile or apparel article is an 
                                originating good eligible for 
                                preferential treatment, of a law that 
                                implements a free trade agreement that 
                                enters into force under the Bipartisan 
                                Trade Promotion Authority Act of 2002,
                        without regard to the source of the fabrics or 
                        yarns.
            ``(4) Special rules for products in commercial quantities 
        in africa.--
                    ``(A) Petition process.--Upon a petition filed by 
                an interested party (which may include a foreign 
                manufacturer), the Commission shall determine whether a 
                fabric or yarn produced in beneficiary sub-Saharan 
                African countries is available in commercial quantities 
                for use by lesser developed beneficiary sub-Saharan 
                African countries.
                    ``(B) Effect of affirmative determination.--
                            ``(i) Determination of quantity 
                        available.--If the Commission determines under 
                        subparagraph (A) that a fabric or yarn produced 
                        in beneficiary sub-Saharan African countries is 
                        available in commercial quantities for use by 
                        lesser developed beneficiary sub-Saharan 
                        African countries, the Commission shall 
                        determine the quantity of the fabric or yarn 
                        that will be so available in lesser developed 
                        beneficiary sub-Saharan African countries in 
                        the applicable 1-year period (as defined in 
                        paragraph (2)(H)) beginning after the 
                        determination is made.
                            ``(ii) Determinations.--In each case in 
                        which the Commission determines that a fabric 
                        or yarn is available in commercial quantities 
                        under subparagraph (A) for an applicable 1-year 
                        period, the Commission shall determine, before 
                        the end of that applicable 1-year period--
                                    ``(I) whether the fabric or yarn 
                                produced in beneficiary sub-Saharan 
                                African countries will be available in 
                                commercial quantities in the succeeding 
                                applicable 1-year period; and
                                    ``(II) if so, the quantity of the 
                                fabric or yarn that will be so 
                                available in that succeeding 1-year 
                                period, subject to clause (iii).
                            ``(iii) Determination regarding imported 
                        articles.--After the end of each applicable 1-
                        year period for which a determination under 
                        clause (i) is in effect, the Commission shall 
                        determine to what extent the quantity of the 
                        fabric or yarn determined under clause (i) to 
                        be available in commercial quantities for use 
                        by lesser developed beneficiary sub-Saharan 
                        African countries was used in the production of 
                        apparel articles receiving preferential 
                        treatment under paragraph (1) or (2) that were 
                        entered in that applicable 1-year period. To 
                        the extent that the quantity so determined was 
                        not so used, then the Commission shall add to 
                        the quantity of that fabric or yarn determined 
                        to be available in the next applicable 1-year 
                        period the quantity not so used in the 
                        preceding applicable 1-year period.
                    ``(C) Denim.--Denim articles provided for in 
                subheading 5209.42.00 of the Harmonized Tariff Schedule 
                of the United States shall be deemed to have been 
                determined to be in abundant supply under subparagraph 
                (A) in an amount of 30,000,000 square meter equivalents 
                for the 1-year period beginning October 1, 2006.
                    ``(D) Presidential authority to restrict imports.--
                            ``(i) In general.--Subject to clause (ii), 
                        the President may by proclamation provide that 
                        apparel articles otherwise eligible for 
                        preferential treatment under paragraph (1) or 
                        (2) that contain a fabric or yarn determined to 
                        be available in commercial quantities under 
                        subparagraph (A) may not receive such 
                        preferential treatment in an applicable 1-year 
                        period unless--
                                    ``(I) the fabric or yarn in such 
                                articles was produced in 1 or more 
                                beneficiary sub-Saharan African 
                                countries; or
                                    ``(II) the Commission has 
                                determined that the quantity of the 
                                fabric or yarn determined under 
                                subparagraph (B) (or (C), as the case 
                                may be) to be available in lesser 
                                developed beneficiary sub-Saharan 
                                African countries for that applicable 
                                1-year period has already been used in 
                                the production of apparel articles 
                                receiving preferential treatment under 
                                paragraph (1) or (2) that were entered 
                                in that applicable 1-year period.
                            ``(ii) Mandatory restriction.--If a fabric 
                        or yarn is determined to be available in 
                        commercial quantities under subparagraph (A) in 
                        an applicable 1-year period, and for 2 
                        consecutive applicable 1-year periods the 
                        quantities determined to be so available are 
                        not used in the production of apparel articles 
                        receiving preferential treatment under 
                        paragraph (1) or (2) that were entered during 
                        those 2 applicable 1-year periods, then 
                        beginning in the succeeding applicable 1-year 
                        period, apparel articles containing that fabric 
                        or yarn are ineligible for preferential 
                        treatment under paragraph (1) or (2) in any 
                        succeeding applicable 1-year period unless the 
                        Commission has determined that the quantity of 
                        the fabric or yarn determined under 
                        subparagraph (B) (or (C), as the case may be) 
                        to be available in lesser developed beneficiary 
                        sub-Saharan African countries for that 
                        applicable 1-year period has already been used 
                        in the production of apparel articles receiving 
                        preferential treatment under paragraph (1) or 
                        (2) that were entered in that applicable 1-year 
                        period.
                    ``(E) Procedures.--The Commission shall use the 
                procedures prescribed in subsection (b)(3)(C)(iv) for 
                the Secretary of Commerce in making determinations 
                under this paragraph.
            ``(5) Removal of designation of fabrics or yarns not 
        available in commercial quantities.--If the President 
        determines that--
                    ``(A) any fabric or yarn described in paragraph 
                (4)(A) was determined to be eligible for preferential 
                treatment, or
                    ``(B) any fabric or yarn described in paragraph 
                (4)(B) was designated as not being available in 
                commercial quantities,
        on the basis of fraud, the President may remove the eligibility 
        or designation (as the case may be) of that fabric or yarn with 
        respect to articles entered after such removal.
            ``(6) Applicability of other provisions.--Subsection 
        (b)(3)(C) applies to apparel articles eligible for preferential 
        treatment under this subsection to the same extent as that 
        subsection applies to apparel articles eligible for 
        preferential treatment under subsection (b)(3).
            ``(7) Definitions.--In this subsection:
                    ``(A) Commission.--The term `Commission' means the 
                United States International Trade Commission.
                    ``(B) Enter; entry.--The terms `enter' and `entry' 
                refer to the entry, or withdrawal from warehouse for 
                consumption, in the customs territory of the United 
                States.
                    ``(C) Foreign material.--The term `foreign 
                material' means a material produced in a country other 
                than a sub-Saharan African country or a country 
                described in paragraph (2)(E).
                    ``(D) Lesser developed beneficiary sub-saharan 
                african country.--The term `lesser developed 
                beneficiary sub-Saharan African country' means--
                            ``(i) a beneficiary sub-Saharan African 
                        country that had a per capita gross national 
                        product of less than $1,500 in 1998, as 
                        measured by the International Bank for 
                        Reconstruction and Development;
                            ``(ii) Botswana; and
                            ``(iii) Namibia.''.
    (b) Additional Preferential Treatment.--Section 112(b) of the 
African Growth and Opportunity Act (19 U.S.C. 3721(b)) is amended by 
adding at the end the following new paragraph:
            ``(8) Textile articles originating entirely in one or more 
        lesser developed beneficiary sub-saharan african countries.--
        Textile articles, other than apparel articles, that are wholly 
        assembled, or are knit-to-shape, in one or more lesser 
        developed beneficiary sub-Saharan African countries, from 
        fabrics, fabric components, components knit-to-shape, and yarns 
        originating entirely in one or more lesser developed 
        beneficiary sub-Saharan African countries.''.
    (c) Technical Amendment.--Section 112(e)(3) of the African Growth 
and Opportunity Act (as redesignated by subsection (a)(1) of this 
section) is amended by striking ``subsection (b)'' and inserting 
``subsections (b) and (c)''.

SEC. 103. TECHNICAL CORRECTIONS.

    Section 112 of the African Growth and Opportunity Act (19 U.S.C. 
3721) is amended as follows:
            (1) Subsection (b)(5) is amended by adding at the end the 
        following new subparagraph:
                    ``(C) Removal of designation of fabrics or yarns 
                not available in commercial quantities.--If the 
                President determines that any fabric or yarn was 
                determined to be eligible for preferential treatment 
                under subparagraph (A) on the basis of fraud, the 
                President is authorized to remove that designation from 
                that fabric or yarn with respect to articles entered 
                after such removal.''.
            (2) Subsection (e) is amended by adding at the end the 
        following:
            ``(4) Enter; entered.--The terms `enter' and `entered' 
        refer to the entry, or withdrawal from warehouse for 
        consumption, in the customs territory of the United States.''.
            (3) Subsection (f) is amended by striking ``2008'' and 
        inserting ``2015''.

SEC. 104. SUB-SAHARAN AFRICA ECONOMIC ACTIVITY CREDIT.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to other credits) is 
amended by adding at the end the following new section:

``SEC. 30D. SUB-SAHARAN AFRICA ECONOMIC ACTIVITY CREDIT.

    ``(a) Allowance of Credit.--Except as otherwise provided in this 
section, if a domestic corporation elects the application of this 
section, there shall be allowed as a credit against the tax imposed by 
this chapter the amount determined under subsection (b).
    ``(b) Amount of Credit.--The amount determined under this 
subsection is the excess of--
            ``(1) the product of the highest rate of tax specified in 
        section 11(b) multiplied by the taxable income (determined 
        without regard to any deduction for the taxes described in 
        paragraph (2)), from sources without the United States, from 
        the active conduct of a qualified trade or business within sub-
        Saharan Africa, over
            ``(2) the aggregate taxes described in section 901(b)(1) 
        which are paid or accrued with respect to such income.
    ``(c) Limitation to Tax Attributable to Foreign Source Income.--
            ``(1) In general.--The amount determined under subsection 
        (b) for any taxable year shall not exceed the excess of--
                    ``(A) the amount which bears the same ratio to the 
                tax against which such credit is taken which the 
                taxpayer's taxable income from sources without the 
                United States (but not in excess of the taxpayer's 
                entire taxable income) bears to the taxpayer's entire 
                taxable income for the same taxable year, over
                    ``(B) the sum of the credits allowed under section 
                901, 30A, and 936 for the taxable year.
            ``(2) Allocable share of specified items taken into 
        account.--In the case of a taxpayer whose specified items are 
        increased under subsection (f), paragraph (1) shall be 
        applied--
                    ``(A) by treating the taxpayer's aggregate 
                allocable share of the taxable income referred to in 
                subsection (f)(2)(A) as taxable income of the taxpayer 
                from sources without the United States, and
                    ``(B) by increasing the amount described in 
                paragraph (1)(B) by the taxpayer's aggregate allocable 
                share of taxes referred to in subsection (f)(2)(B).
    ``(d) Limitations on Credit for Active Business Income.--The amount 
determined under subsection (b) for any taxable year shall not exceed 
the sum of the following amounts:
            ``(1) 60 percent of the sum of--
                    ``(A) the aggregate amount of the domestic 
                corporation's qualified Africa wages for such taxable 
                year, plus
                    ``(B) the allocable qualified employee fringe 
                benefit expenses of the domestic corporation for such 
                taxable year.
            ``(2) The sum of--
                    ``(A) 15 percent of the depreciation allowances for 
                the taxable year with respect to short-life qualified 
                tangible property,
                    ``(B) 40 percent of the depreciation allowances for 
                the taxable year with respect to medium-life qualified 
                tangible property, and
                    ``(C) 65 percent of the depreciation allowances for 
                the taxable year with respect to long-life qualified 
                tangible property.
    ``(e) Definitions.--For purposes of this section--
            ``(1) Qualified trade or business.--The term `qualified 
        trade or business' means any trade or business other than--
                    ``(A) the trade or business of mining (as defined 
                in section 613(c)(2)), and
                    ``(B) the trade or business of exploring for, 
                developing, producing, refining, transporting, or 
                selling crude oil or natural gas, or any product 
                thereof.
            ``(2) Qualified africa wages.--
                    ``(A) In general.--The term `qualified Africa 
                wages' means, with respect to any taxable year, the 
                excess of--
                            ``(i) the sum of the wages which are paid 
                        or incurred during such taxable year in 
                        connection with the active conduct of a 
                        qualified trade or business within sub-Saharan 
                        Africa to any employee for services performed 
                        in sub-Saharan Africa, but only if such 
                        services are performed while the principal 
                        place of employment of such employee is within 
                        sub-Saharan Africa, over
                            ``(ii) the sum of wages (if any) paid or 
                        incurred during the last taxable year ending 
                        before the date of the enactment of this 
                        section in connection with the active conduct 
                        of a qualified trade or business within sub-
                        Saharan Africa (determined as of the first day 
                        of the taxable year referred to in clause (i)) 
                        to any employee for services performed in sub-
                        Saharan Africa (as so determined), but only if 
                        such services are performed while the principal 
                        place of employment of such employee is within 
                        sub-Saharan Africa (as so determined).
                    ``(B) Applicable rules for determining wages.--For 
                purposes of subparagraph (A), rules similar to the 
                rules of subparagraphs (B), (C), and (D) of section 
                936(i)(1) shall apply.
            ``(3) Qualified employee fringe benefit expenses.--
                    ``(A) In general.--The term `qualified employee 
                fringe benefit expense' means, with respect to any 
                taxable year, the excess of--
                            ``(i) the sum of the employee fringe 
                        benefit expenses which are paid or incurred 
                        during such taxable year in connection with the 
                        active conduct of a qualified trade or business 
                        within sub-Saharan Africa to or for the benefit 
                        of any employee for services performed in sub-
                        Saharan Africa, but only if such services are 
                        performed while the principal place of 
                        employment of such employee is within sub-
                        Saharan Africa, over
                            ``(ii) the sum of the employee fringe 
                        benefit expenses paid or incurred during the 
                        last taxable year ending before the date of the 
                        enactment of this section in connection with 
                        the active conduct of a qualified trade or 
                        business within sub-Saharan Africa (determined 
                        as of the first day of the taxable year 
                        referred to in clause (i)) to or for the 
                        benefit of any employee for services performed 
                        in sub-Saharan Africa (as so determined), but 
                        only if such services are performed while the 
                        principal place of employment of such employee 
                        is within sub-Saharan Africa (as so 
                        determined).
                    ``(B) Employee fringe benefit expenses.--The term 
                `employee fringe benefit expenses' means with respect 
                to any taxable year the expenses described in section 
                936(i)(2)(B).
            ``(4) Definitions related to depreciation.--
                    ``(A) Depreciation allowances.--The term 
                `depreciation allowances' means the depreciation 
                deductions allowable under section 167 to the taxpayer.
                    ``(B) Qualified tangible property.--The term 
                `qualified tangible property' means any tangible 
                property--
                            ``(i) substantially all of the use of which 
                        is in sub-Saharan Africa in the active conduct 
                        of a qualified trade or business by the 
                        taxpayer in sub-Saharan Africa,
                            ``(ii) the original use of which in sub-
                        Saharan Africa commences with the taxpayer 
                        after September 21, 2006, and
                            ``(iii) which is acquired by the taxpayer 
                        by purchase (as defined in section 179(d)) 
                        after September 21, 2006, but only if no 
                        written binding contract for the acquisition 
                        was in effect on or before such date.
                Such term shall not include any vessel or aircraft, 
                including any container used in connection with any 
                such vessel or aircraft, within the meaning of section 
                863(c)(3).
                    ``(C) Short-, medium-, and long-life qualified 
                tangible property.--The terms `short-life qualified 
                tangible property', `medium-life qualified tangible 
                property', and `long-life qualified tangible property' 
                shall have the same meaning given such terms, 
                respectively, by section 936(i)(4)(B), except that in 
                applying such section the term `qualified tangible 
                property' shall have the meaning given such term by 
                subparagraph (B).
            ``(5) Sub-saharan africa.--The term `sub-Saharan Africa' 
        means, with respect to any taxable year, the region comprised 
        of countries for which there is in effect on the first day of 
        such taxable year a designation as an eligible sub-Saharan 
        Africa country under section 104 of the African Growth and 
        Opportunity Act (19 U.S.C. 3703).
    ``(f) Allocation of Items From Controlled Foreign Corporations to 
United States Shareholders.--
            ``(1) In general.--For purposes of this section, in the 
        case of a domestic corporation which elects the application of 
        this section, each of the domestic corporation's specified 
        items shall be increased by such corporation's allocable share 
        of each such specified item of each controlled foreign 
        corporation with respect to which such domestic corporation is 
        a United States shareholder (as defined in section 951(b)).
            ``(2) Specified items.--For purposes of this subsection, 
        the term `specified items' means--
                    ``(A) the taxable income taken into account under 
                subsection (b)(1),
                    ``(B) the taxes taken into account under subsection 
                (b)(2),
                    ``(C) the wages taken into account under clauses 
                (i) and (ii) of subsection (e)(2)(A),
                    ``(D) the expenses taken into account under clauses 
                (i) and (ii) of subsection (e)(3)(A), and
                    ``(E) the depreciation allowances with respect to 
                each class of property under subparagraphs (A), (B), 
                and (C) of subsection (d)(2).
        For purposes of determining any specified item of a controlled 
        foreign corporation under this subsection, such corporation 
        shall be treated as a domestic corporation electing the 
        application of this section. For purposes of this paragraph, 
        taxes do not include any withholding tax paid to a foreign 
        government with respect to payments by the controlled foreign 
        corporation to its shareholders.
            ``(3) Allocable share.--For purposes of this subsection, 
        the term `allocable share' means, with respect to any item of a 
        controlled foreign corporation which is owned by any United 
        States shareholder (as defined in section 951(b)), the 
        percentage of total combined voting power of all classes of 
        stock entitled to vote of such foreign corporation which is 
        owned by such United States shareholder (within the meaning of 
        section 958(a)), or is considered as owned by such United 
        States shareholder by applying the rules of ownership of 
        section 958(b). For purposes of the preceding sentence, section 
        958(b) shall be applied in the same manner as in determining 
        whether a United States person is a United States shareholder 
        within the meaning of section 951(b).
            ``(4) Dividends from sub-saharan africa business 
        activity.--Dividends from a controlled foreign corporation and 
        amounts included in gross income under section 951(a) (and any 
        taxes associated with such dividends or amounts under section 
        902 or 960) shall not be taken into account in determining the 
        taxable income or taxes which are taken into account under 
        subsections (b) and (c) to the extent such dividends or amounts 
        are attributable to income described in paragraph (2)(A) and 
        taken into account under paragraph (1).
    ``(g) Carryforward.--If the limitation under subsection (d) for any 
taxable year exceeds the credit allowed under subsection (a) for such 
taxable year, such excess shall be carried to the succeeding taxable 
year and added to the limitation under subsection (d) for such 
succeeding taxable year. No limitation may be carried forward under 
this subsection to any taxable year following the tenth taxable year 
after the taxable year in which the limitation arose. For purposes of 
the preceding sentence, limitations shall be treated as used on a 
first-in first-out basis.
    ``(h) Credit Not Allowed Against Certain Taxes.--The credit 
provided by subsection (a) shall not be allowed against the tax imposed 
by--
            ``(1) section 59A (relating to environmental tax),
            ``(2) section 531 (relating to the tax on accumulated 
        earnings),
            ``(3) section 541 (relating to personal holding company 
        tax), or
            ``(4) section 1351 (relating to recoveries of foreign 
        expropriation losses).
    ``(i) Administrative Provisions.--For purposes of this title--
            ``(1) rules similar to the rules of subsections (b), (g), 
        and (h) of section 936 shall apply in the same manner as if the 
        credit under this section were a credit under section 
        936(a)(1)(A) for a domestic corporation to which section 
        936(a)(4)(A) applies,
            ``(2) the credit under this section shall be treated in the 
        same manner as the credit under section 936 (other than for 
        purposes of subsection (c)), and
            ``(3) a corporation to which this section applies shall be 
        treated in the same manner as if it were a corporation electing 
        the application of section 936.
    ``(j) Aggregation Rule for Wages and Fringe Benefits.--
            ``(1) In general.--All members of an expanded affiliated 
        group shall be treated as a single corporation for purposes 
        paragraphs (2) and (3) of subsection (e).
            ``(2) Expanded affiliated group.--For purposes of paragraph 
        (1), the term `expanded affiliated group' means an affiliated 
        group as defined in section 1504(a), determined--
                    ``(A) by substituting `more than 50 percent' for 
                `at least 80 percent' each place it appears, and
                    ``(B) without regard to paragraphs (2) and (4) of 
                section 1504(b).
    ``(k) Election.--The election provided in subsection (a) shall be 
made at such time and in such manner as the Secretary may by 
regulations prescribe. Any such election shall apply for the taxable 
year for which made and for each succeeding taxable year. Such election 
may be revoked only with the consent of the Secretary.
    ``(l) Regulations.--The Secretary shall prescribe regulations to 
carry out this section, including regulations--
            ``(1) for determining the credit under this section for 
        when a country is designated under section 104 of the African 
        Growth and Opportunity Act as an eligible sub-Saharan Africa 
        country on a day other than the first day of the taxable year 
        or if such designation is terminated during the taxable year,
            ``(2) for determining the allocable share of specified 
        items (as defined in subsection (f)) of a partnership in the 
        case of a domestic corporation or a controlled foreign 
        corporation in which such domestic corporation is a United 
        States shareholder, or a lower tier entity of either such 
        corporation, which is a partner in such partnership, and
            ``(3) to prevent the abuse of this section.
    ``(m) Termination.--No credit shall be allowed under this section 
with respect to any taxable year beginning after December 31, 2015.''.
    (b) Conforming Amendments.--
            (1) The first sentence of section 55(c)(1) of such Code is 
        amended by striking ``27(b), and'' and inserting ``27(b),'' and 
        by inserting before the period at the end the following: ``, 
        and the Sub-Saharan Africa economic activity credit under 
        section 30D''.
            (2) Section 56(g)(4)(C)(ii)(I) of such Code is amended by 
        inserting ``30D,'' after ``30A,''.
            (3) Section 56(g)(4)(C)(iii)(VI) of such Code is amended by 
        inserting before the period at the end ``and, notwithstanding 
        section 30D(i), shall not be treated as including references to 
        section 30D''.
            (4) Section 59(b) of such Code is amended by inserting ``, 
        30D,'' after ``30A'' each place it appears in the heading and 
        text.
            (5) The table of sections for subpart B of part IV of 
        subchapter A of chapter 1 of such Code (relating to other 
        credits) is amended by adding at the end the following new 
        item:

``Sec. 30D. Sub-Saharan Africa economic activity credit.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

       TITLE II--GENERALIZED SYSTEM OF PREFERENCES (GSP) PROGRAM

SEC. 201. LIMITATIONS ON WAIVERS OF COMPETITIVE NEED LIMITATION.

    Section 503(d)(4)(B) of the Trade Act of 1974 (19 U.S.C. 
2463(d)(4)(B)) is amended--
            (1) by striking ``The President'' and inserting ``(i) The 
        President'';
            (2) by striking ``(i) had'' and inserting ``(I) had'' and 
        by striking ``(ii) had'' and inserting ``(II) had''; and
            (3) by adding at the end the following new clauses:
                    ``(ii) Beginning on January 1, 2007, the President 
                may not exercise the waiver authority provided under 
                this subsection with respect to a quantity of an 
                eligible article of a beneficiary developing country 
                entered during any calendar year if the President 
                determines that the aggregate appraised value of the 
                article of the country that entered duty-free under 
                this title during the preceding calendar year exceeded 
                $1,500,000,000.
                    ``(iii) Beginning on January 1, 2007, the President 
                may not exercise the waiver authority provided under 
                this subsection with respect to a quantity of any 
                eligible article of a beneficiary developing country 
                entered during any calendar year if the President 
                determines that the per capita gross national income 
                (GNI) of the country during the preceding calendar year 
                exceeded $3,400.''.

SEC. 202. EXTENSION OF GSP PROGRAM.

    Section 505 of the Trade Act of 1974 (19 U.S.C. 2465) is amended by 
striking ``December 31, 2006'' and inserting ``December 31, 2008''.

                            TITLE III--HAITI

SEC. 301. SHORT TITLE.

    This Act may be cited as the ``Haitian Hemispheric Opportunity 
through Partnership Encouragement Act of 2006''.

SEC. 302. TRADE BENEFITS FOR HAITI.

    (a) In General.--The Caribbean Basin Economic Recovery Act (19 
U.S.C. 2701 et seq.) is amended by inserting after section 213 the 
following new section:

``SEC. 213A. SPECIAL RULES FOR HAITI.

    ``(a) Definitions.--In this section:
            ``(1) Applicable 1-year period.--
                    ``(A) In general.--The term ``applicable 1-year 
                period'' means each of the 1-year periods described in 
                subparagraphs (B) through (F).
                    ``(B) Initial applicable 1-year period.--The term 
                `initial applicable 1-year period' means the 1-year 
                period beginning on the date of the enactment of the 
                Haitian Hemispheric Opportunity through Partnership 
                Encouragement Act of 2006.
                    ``(C) Second applicable 1-year period.--The term 
                `second applicable 1-year period' means the 1-year 
                period beginning on the day after the last day of the 
                initial applicable 1-year period.
                    ``(D) Third applicable 1-year period.--The term 
                `third applicable 1-year period' means the 1-year 
                period beginning on the day after the last day of the 
                second applicable 1-year period.
                    ``(E) Fourth applicable 1-year period.--The term 
                `fourth applicable 1-year period' means the 1-year 
                period beginning on the day after the last day of the 
                third applicable 1-year period.
                    ``(F) Fifth applicable 1-year period.--The term 
                `fifth applicable 1-year period' means the 1-year 
                period beginning on the day after the last day of the 
                fourth applicable 1-year period.
            ``(2) Enter; entry.--The terms `enter' and `entry' refer to 
        the entry, or withdrawal from warehouse for consumption, in the 
        customs territory of the United States.
    ``(b) Apparel Articles.--
            ``(1) In general.--In addition to any other preferential 
        treatment under this title, apparel articles described in 
        paragraph (2) of a producer or entity controlling production 
        that are imported directly from Haiti shall enter the United 
        States free of duty during an applicable 1-year period, subject 
        to the limitations set forth in paragraphs (2) and (3), if 
        Haiti has met the requirements of subsections (d) and (e).
            ``(2) Apparel articles described.--
                    ``(A) For initial applicable 1-year period.--
                Apparel articles described in this paragraph are 
                apparel articles that are wholly assembled, or are 
                knit-to-shape, in Haiti from any combination of 
                fabrics, fabric components, components knit-to-shape, 
                and yarns, that are entered during the initial 
                applicable 1-year period.
                    ``(B) For other applicable 1-year periods.--
                            ``(i) In general.--In each of the second, 
                        third, fourth, and fifth applicable 1-year 
                        periods, apparel articles described in this 
                        paragraph are apparel articles that are wholly 
                        assembled, or are knit-to-shape, in Haiti from 
                        any combination of fabrics, fabric components, 
                        components knit-to-shape, and yarns, only if, 
                        for each entry in the preceding applicable 1-
                        year period, the sum of--
                                    ``(I) the cost or value of the 
                                materials produced in Haiti or one or 
                                more countries described in 
                                subparagraph (C), or any combination 
                                thereof, plus
                                    ``(II) the direct costs of 
                                processing operations (as defined in 
                                section 213(a)(3)) performed in Haiti 
                                or one or more countries described in 
                                subparagraph (C), or any combination 
                                thereof,
                        is not less than the applicable percentage (as 
                        defined in subparagraph (E)(i)) of the declared 
                        customs value of such apparel articles.
                            ``(ii) Deductions.--In calculating cost or 
                        value under clause (i)(I), there shall be 
                        deducted the cost or value of--
                                    ``(I) any foreign materials that 
                                are used in the production of the 
                                apparel articles in Haiti; and
                                    ``(II) any foreign materials that 
                                are used in the production of the 
                                materials described in clause (i)(I).
                    ``(C) Countries described.--The countries referred 
                to in subparagraph (B) are the following:
                            ``(i) The United States.
                            ``(ii) Any country that is a party to a 
                        free trade agreement with the United States 
                        that is in effect on the date of the enactment 
                        of the Haitian Hemispheric Opportunity through 
                        Partnership Encouragement Act of 2006, or that 
                        enters into force under the Bipartisan Trade 
                        Promotion Authority Act of 2002 (19 U.S.C. 3801 
                        et seq.).
                            ``(iii) Any country designated as a 
                        beneficiary country under section 213(b)(5)(B) 
                        of this Act.
                            ``(iv) Any country designated as a 
                        beneficiary country under section 506A(a)(1) of 
                        the Trade Act of 1974 (19 U.S.C. 2466a(a)(1)), 
                        if a finding has been made by the President or 
                        the President's designee, and published in the 
                        Federal Register, that the country has 
                        satisfied the requirements of section 113 of 
                        the African Growth and Opportunity Act (19 
                        U.S.C. 3722).
                            ``(v) Any country designated as a 
                        beneficiary country under section 204(b)(6)(B) 
                        of the Andean Trade Preference Act (19 U.S.C. 
                        3203(b)(6)(B)).
                    ``(D) Annual aggregation.--
                            ``(i) Aggregation.--The requirements under 
                        subparagraph (B) relating to applicable 
                        percentage may also be met for articles of a 
                        producer or an entity controlling production 
                        that enter during an applicable 1-year period 
                        by aggregating--
                                    ``(I) the cost or value of 
                                materials under clause (i)(I) of 
                                subparagraph (B), and
                                    ``(II) the direct costs of 
                                processing operations under clause 
                                (i)(II) of subparagraph (B),
                        of all apparel articles of that producer or 
                        entity controlling production that are wholly 
                        assembled, or are knit-to-shape, in Haiti and 
                        are entered during that applicable 1-year 
                        period.
                            ``(ii) Deductions.--In calculating cost or 
                        value under clause (i)(I), there shall be 
                        deducted the cost or value of--
                                    ``(I) any foreign materials that 
                                are used in the production of the 
                                apparel articles in Haiti; and
                                    ``(II) any foreign materials that 
                                are used in the production of the 
                                materials described in clause (i)(I).
                            ``(iii) Inclusion in calculation of other 
                        articles receiving preferential treatment.--(I) 
                        The entry of a woven apparel article receiving 
                        preferential treatment under paragraph (4) is 
                        not included in an annual aggregation under 
                        clause (i).
                            ``(II) Entries of articles receiving 
                        preferential treatment under paragraph (5) are 
                        not included in an annual aggregation under 
                        clause (i) unless the producer or entity 
                        controlling production elects, at the time the 
                        annual aggregation calculation is made, to 
                        include such entries in such aggregation.
                            ``(III) Entries of apparel articles that 
                        receive preferential treatment under any 
                        provision of law other than this subsection or 
                        are subject to the `General' column 1 rate of 
                        duty under the HTS are not included in an 
                        annual aggregation under clause (i) unless the 
                        producer or entity controlling production 
                        elects, at the time the annual aggregation 
                        calculation is made, to include such entries in 
                        such aggregation.
                    ``(E) Definitions.--In this paragraph:
                            ``(i) Applicable percentage.--The term 
                        ``applicable percentage'' means--
                                    ``(I) 50 percent or more during the 
                                initial applicable 1-year period, the 
                                second applicable 1-year period, and 
                                the third applicable 1-year period;
                                    ``(II) 55 percent or more during 
                                the fourth applicable 1-year period; 
                                and
                                    ``(III) 60 percent or more during 
                                the fifth applicable 1-year period.
                            ``(ii) Foreign material.--The term `foreign 
                        material' means a material produced in a 
                        country other than Haiti or any country 
                        described in subparagraph (C).
                    ``(F) Development of procedure to ensure 
                compliance.--
                            ``(i) In general.--The Bureau of Customs 
                        and Border Protection of the Department of 
                        Homeland Security shall develop and implement 
                        methods and procedures to ensure ongoing 
                        compliance with the requirements set forth in 
                        subparagraphs (B) and (D).
                            ``(ii) Noncompliance.--If the Bureau of 
                        Customs and Border Protection finds that a 
                        producer or an entity controlling production 
                        has not satisfied such requirements in any 
                        applicable 1-year period, then apparel articles 
                        described in subparagraph (B) of that producer 
                        or entity shall be ineligible for preferential 
                        treatment under paragraph (1) during any 
                        succeeding applicable 1-year period until--
                                    ``(I) the cost or value of 
                                materials under subclause (I) of 
                                subparagraph (B)(i), plus
                                    ``(II) the direct costs of 
                                processing operations under subclause 
                                (II) of subparagraph (B)(i),
                        of that producer or entity controlling 
                        production, is not less than the applicable 
                        percentage under subparagraph (E)(i), plus 10 
                        percent, of the aggregate declared customs 
                        value of all apparel articles of that producer 
                        or entity controlling production that are 
                        wholly assembled, or are knit-to-shape, in 
                        Haiti and are entered during the preceding 
                        applicable 1-year period.
                            ``(iii) Retroactive application of duty-
                        free treatment.--If--
                                    ``(I) a producer or an entity 
                                controlling production is ineligible 
                                for preferential treatment under 
                                paragraph (1) in an applicable 1-year 
                                period because that producer or entity 
                                controlling production did not satisfy 
                                the requirements of subparagraph (B) or 
                                (D), and
                                    ``(II) that producer or entity 
                                controlling production satisfies the 
                                requirements of clause (ii) of this 
                                subparagraph in that applicable 1-year 
                                period,
                        then, notwithstanding section 514 of the Tariff 
                        Act of 1930 (19 U.S.C. 1514) or any other 
                        provision of law, upon proper request filed 
                        with the Bureau of Customs and Border 
                        Protection before the 90th day after the Bureau 
                        of Customs and Border Protection determines 
                        that subclause (II) applies, the entry of any 
                        articles--
                                    ``(aa) that was made during that 
                                applicable 1-year period, and
                                    ``(bb) with respect to which there 
                                would have been preferential treatment 
                                under paragraph (1) if the producer or 
                                entity controlling production had 
                                satisfied the requirements in 
                                subparagraph (B) or (D) (as the case 
                                may be),
                        shall be liquidated or reliquidated as though 
                        such preferential treatment under paragraph (1) 
                        applied to such entry.
                    ``(G) Fabrics not available in commercial 
                quantities.--
                            ``(i) In general.--For purposes of 
                        determining the applicable percentage under 
                        subparagraph (B) or (D), there may be included 
                        in that percentage--
                                    ``(I) the cost of fabrics or yarns 
                                to the extent that apparel articles of 
                                such fabrics or yarns would be eligible 
                                for preferential treatment, without 
                                regard to the source of the fabrics or 
                                yarns, under Annex 401 of the NAFTA; 
                                and
                                    ``(II) the cost of fabrics or yarns 
                                that are designated as not being 
                                available in commercial quantities for 
                                purposes of--
                                            ``(aa) section 
                                        213(b)(2)(A)(v) of this Act,
                                            ``(bb) section 112(b)(5) of 
                                        the African Growth and 
                                        Opportunity Act,
                                            ``(cc) section 
                                        204(b)(3)(B)(i)(III) or (ii) of 
                                        the Andean Trade Preference 
                                        Act, or
                                            ``(dd) any other provision, 
                                        relating to determining whether 
                                        a textile or apparel article is 
                                        an originating good eligible 
                                        for preferential treatment, of 
                                        a law that implements a free 
                                        trade agreement that enters 
                                        into force under the Bipartisan 
                                        Trade Promotion Authority Act 
                                        of 2002,
                                without regard to the source of the 
                                fabrics or yarns.
                            ``(ii) Removal of designation of fabrics or 
                        yarns not available in commercial quantities.--
                        If the President determines that--
                                    ``(I) any fabric or yarn described 
                                in clause (i)(I) was determined to be 
                                eligible for preferential treatment, or
                                    ``(II) any fabric or yarn described 
                                in clause (i)(II) was designated as not 
                                being available in commercial 
                                quantities,
                         on the basis of fraud, the President is 
                        authorized to remove the eligibility or 
                        designation (as the case may be) of that fabric 
                        or yarn with respect to articles entered after 
                        such removal.
            ``(3) Quantitative limitations.--The preferential treatment 
        described in paragraph (1) shall be extended, during each of 
        the applicable 1-year periods set forth in the following table, 
        to not more than the corresponding percentage of the aggregate 
        square meter equivalents of all apparel articles imported into 
        the United States in the most recent 12-month period for which 
        data are available:

                                                      The corresponding
``During the:                                            percentage is:
    Initial applicable 1-year period..............           1 percent 
    Second applicable 1-year period...............        1.25 percent 
    Third applicable 1-year period................         1.5 percent 
    Fourth applicable 1-year period...............        1.75 percent 
    Fifth applicable 1-year period................           2 percent.
        No preferential treatment shall be provided under paragraph (1) 
        after the last day of the fifth applicable 1-year period.
            ``(4) Special rule for woven apparel.--In the case of 
        apparel articles classifiable under chapter 62 of the HTS 
        (other than articles classifiable under subheading 6212.10 of 
        the HTS), as in effect on the date of the enactment of the 
        Haitian Hemispheric Opportunity through Partnership 
        Encouragement Act of 2006, that do not qualify for preferential 
        treatment under paragraph (1) because they do not meet the 
        percentage requirements under paragraph (2)(B) or (2)(D), the 
        preferential treatment under paragraph (1)--
                    ``(A) shall be extended, in addition to the 
                quantities permitted under paragraph (3) to--
                            ``(i) not more than 50,000,000 square meter 
                        equivalents of such apparel articles for the 
                        initial applicable 1-year period;
                            ``(ii) not more than 50,000,000 square 
                        meter equivalents of such apparel articles for 
                        the second applicable 1-year period; and
                            ``(iii) not more than 33,500,000 square 
                        meter equivalents for the third applicable 1-
                        year period; and
                    ``(B) may not be extended to such apparel articles 
                after the last day of the third applicable 1-year 
                period.
            ``(5) Special rule for brassieres.--The preferential 
        treatment under paragraph (1) shall, subject to the limitations 
        under paragraph (3), be extended to any article classifiable 
        under heading 6212.10 of the HTS, if the article is both cut 
        and sewn or otherwise assembled in Haiti or the United States, 
        or both, without regard to the source of the fabric or 
        components from which the article is made, and if Haiti has met 
        the requirements of subsections (d) and (e).
    ``(c) Special Rule for Certain Wire Harness Automotive 
Components.--
            (1) In general.--Any wire harness automotive component that 
        is the product or manufacture of Haiti and is imported directly 
        from Haiti into the customs territory of the United States 
        shall enter the United States free of duty, during the 5-year 
        period beginning on the date of the enactment of the Haitian 
        Hemispheric Opportunity through Partnership Encouragement Act 
        of 2006, if Haiti has met the requirements of subsection (d) 
        and if the sum of--
                    ``(A) the cost or value of the materials produced 
                in Haiti or one or more countries described in 
                subsection (b)(2)(C), or any combination thereof, plus
                    ``(B) the direct costs of processing operations (as 
                defined in section 213(a)(3)) performed in Haiti or the 
                United States, or both,
        is not less than 50 percent of the declared customs value of 
        such wire harness automotive component.
            ``(2) Wire harness automotive component.--For purposes of 
        this subsection, the term ``wire harness automotive component'' 
        means any article provided for in subheading 8544.30.00 of the 
        HTS, as in effect on the date of the enactment of the Haitian 
        Hemispheric Opportunity through Partnership Encouragement Act 
        of 2006.
    ``(d) Eligibility Requirements.--
            ``(1) In general.--Haiti shall be eligible for preferential 
        treatment under this section if the President determines and 
        certifies to Congress that Haiti--
                    ``(A) has established, or is making continual 
                progress toward establishing--
                            ``(i) a market-based economy that protects 
                        private property rights, incorporates an open 
                        rules-based trading system, and minimizes 
                        government interference in the economy through 
                        measures such as price controls, subsidies, and 
                        government ownership of economic assets;
                            ``(ii) the rule of law, political 
                        pluralism, and the right to due process, a fair 
                        trial, and equal protection under the law;
                            ``(iii) the elimination of barriers to 
                        United States trade and investment, including 
                        by--
                                    ``(I) the provision of national 
                                treatment and measures to create an 
                                environment conducive to domestic and 
                                foreign investment;
                                    ``(II) the protection of 
                                intellectual property; and
                                    ``(III) the resolution of bilateral 
                                trade and investment disputes;
                            ``(iv) economic policies to reduce poverty, 
                        increase the availability of health care and 
                        educational opportunities, expand physical 
                        infrastructure, promote the development of 
                        private enterprise, and encourage the formation 
                        of capital markets through microcredit or other 
                        programs;
                            ``(v) a system to combat corruption and 
                        bribery, such as signing and implementing the 
                        Convention on Combating Bribery of Foreign 
                        Public Officials in International Business 
                        Transactions; and
                            ``(vi) protection of internationally 
                        recognized worker rights, including the right 
                        of association, the right to organize and 
                        bargain collectively, a prohibition on the use 
                        of any form of forced or compulsory labor, a 
                        minimum age for the employment of children, and 
                        acceptable conditions of work with respect to 
                        minimum wages, hours of work, and occupational 
                        safety and health;
                    ``(B) does not engage in activities that undermine 
                United States national security or foreign policy 
                interests; and
                    ``(C) does not engage in gross violations of 
                internationally recognized human rights or provide 
                support for acts of international terrorism and 
                cooperates in international efforts to eliminate human 
                rights violations and terrorist activities.
            ``(2) Time limit for determination.--The President shall 
        determine whether Haiti meets the requirements of paragraph (1) 
        not later than 90 days after the date of the enactment of the 
        Haitian Hemispheric Opportunity through Partnership 
        Encouragement Act of 2006.
            ``(3) Continuing compliance.--If the President determines 
        that Haiti is not making continual progress in meeting the 
        requirements described in paragraph (1)(A), the President shall 
        terminate the preferential treatment under this section.
    ``(e) Conditions Regarding Enforcement of Circumvention.--
            ``(1) In general.--The preferential treatment under 
        subsection (b)(1) shall not apply unless the President 
        certifies to Congress that Haiti is meeting the following 
        conditions:
                    ``(A) Haiti has adopted an effective visa system, 
                domestic laws, and enforcement procedures applicable to 
                articles described in subsection (b) to prevent 
                unlawful transshipment of the articles and the use of 
                counterfeit documents relating to the importation of 
                the articles into the United States.
                    ``(B) Haiti has enacted legislation or promulgated 
                regulations that would permit the Bureau of Customs and 
                Border Protection verification teams to have the access 
                necessary to investigate thoroughly allegations of 
                transshipment through such country.
                    ``(C) Haiti agrees to report, on a timely basis, at 
                the request of the Bureau of Customs and Border 
                Protection, on the total exports from and imports into 
                that country of articles described in subsection (b), 
                consistent with the manner in which the records are 
                kept by Haiti.
                    ``(D) Haiti agrees to cooperate fully with the 
                United States to address and take action necessary to 
                prevent circumvention as provided in Article 5 of the 
                Agreement on Textiles and Clothing.
                    ``(E) Haiti agrees to require all producers and 
                exporters of articles described in subsection (b) in 
                that country to maintain complete records of the 
                production and the export of such articles, including 
                materials used in the production, for at least 5 years 
                after the production or export (as the case may be).
                    ``(F) Haiti agrees to report, on a timely basis, at 
                the request of the Bureau of Customs and Border 
                Protection, documentation establishing the country of 
                origin of articles described in subsection (b) as used 
                by that country in implementing an effective visa 
                system.
            ``(2) Definition of transshipment.--Transshipment within 
        the meaning of this subsection has occurred when preferential 
        treatment for a textile or apparel article under this section 
        has been claimed on the basis of material false information 
        concerning the country of origin, manufacture, processing, or 
        assembly of the article or any of its components. For purposes 
        of this paragraph, false information is material if disclosure 
        of the true information would mean or would have meant that the 
        article is or was ineligible for preferential treatment under 
        this section.
    ``(f) Regulations.--The President shall issue regulations to carry 
out this section not later than 180 days after the date of the 
enactment of the Haitian Hemispheric Opportunity through Partnership 
Encouragement Act of 2006. The President shall consult with the 
Committee on Ways and Means of the House of Representatives and the 
Committee on Finance of the Senate in preparing such regulations.''.

SEC. 303. ITC STUDY.

    The International Trade Commission shall, not later than 18 months 
after the date of the enactment of this Act, submit a report to 
Congress on the effects of the amendments made by this Act on the trade 
markets and industries, involving textile and apparel articles, of 
Haiti, the countries described in clauses (ii) and (iii) of section 
213A(b)(2)(C) of the Caribbean Basin Economic Recovery Act (as added by 
section 302 of this Act), and the United States.

SEC. 304. SENSE OF CONGRESS ON INTERPRETATION OF TEXTILE AND APPAREL 
              PROVISIONS FOR HAITI.

    It is the sense of the Congress that the executive branch, 
particularly the Committee for the Implementation of Textile Agreements 
(CITA), the Bureau of Customs and Border Protection of the Department 
of Homeland Security, and the Department of Commerce, should interpret, 
implement, and enforce the provisions of section 213A(b) of the 
Caribbean Basin Economic Recovery Act, as added by section 302 of this 
Act, relating to preferential treatment of textile and apparel 
articles, broadly in order to expand trade by maximizing opportunities 
for imports of such articles from Haiti.

SEC. 305. TECHNICAL AMENDMENTS.

    (a) CBI.--Section 213(b)(2)(A)(v) of the Caribbean Basin Economic 
Recovery Act (19 U.S.C. 2703(b)(2)(A)(v)) is amended by adding at the 
end the following new subclause:
                            ``(III) If the President determines that 
                        any fabric or yarn was determined to be 
                        eligible for preferential treatment under 
                        subclause (I) on the basis of fraud, the 
                        President is authorized to remove that 
                        designation from that fabric or yarn with 
                        respect to articles entered after such 
                        removal.''.
    (b) ATPA.--Section 204(b)(3)(B) of the Andean Trade Preference Act 
(19 U.S.C. 3202(b)(3)(B)) is amended by adding at the end the following 
new clause:
                            ``(viii) Removal of designation of fabrics 
                        or yarns not available in commercial 
                        quantities.--If the President determines that 
                        any fabric or yarn was determined to be 
                        eligible for preferential treatment under 
                        clause (i)(III) or (ii) on the basis of fraud, 
                        the President is authorized to remove that 
                        designation from that fabric or yarn with 
                        respect to articles entered after such 
                        removal.''.

SEC. 306. EFFECTIVE DATE.

    This title and the amendments made by this title apply to articles 
entered, or withdrawn from warehouse for consumption, on or after the 
15th day after the date of the enactment of this Act.
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